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Primoris Services (PRIM) Q1 Earnings Meet, Revenues Beat

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Primoris Services Corporation’s (PRIM - Free Report) first-quarter 2017 earnings increased a whopping 200% year over year to 15 cents per share. Earnings came in line with the Zacks Consensus Estimate.

The company posted record revenues of $561.5 million, which surged 30% from the prior-year quarter mainly driven by two large pipeline projects in the Pipeline & Underground (P&U) segment. Revenues beat the Zacks Consensus Estimate of $499 million.

Cost of sales jumped 29.5% to $506 million from $391 million in the year-ago quarter. Gross profit improved 40% year over year to $55 million. Gross margin expanded 70 basis points (bps) year over year to 9.8%, reflecting the positive impact of the two pipeline projects in the P&U segment, as well as improved margins on power and industrial work in the Power, Industrial, and Engineering segment.

Primoris Services Corporation Price, Consensus and EPS Surprise

 

Primoris Services Corporation Price, Consensus and EPS Surprise | Primoris Services Corporation Quote

Selling, general and administrative expenses flared up 22% year over year to $39.9 million. Operating profit improved 130% to $15.2 million from $6.6 million in the prior-year quarter. Consequently, operating margin advanced 120 bps year over year to 2.7%.

Segment Performance

Toward the end of 2016, Primoris segregated its business into three reportable segments: Energy segment, East Construction Services segment and West Construction Services segment.  In first-quarter 2017, Primoris changed its reportable segments to match the changes in the company’s realigned internal organization and management structure.

Power, Industrial, and Engineering: Net sales decreased 5.3% to $131 million from $138.6 million in the year-ago quarter. Gross profit improved 33.6% to $15.5 million from $11.6 million recorded in the year-ago quarter.

Pipeline and Underground: Sales increased significantly year over year to $183 million. The segment reported a gross profit of $28 million compared with $5 million in the year-earlier quarter.

Utilities and Distribution: Net sales grew 12.7% year over year to $117 million. However, gross profit plunged 30% to $8.3 million from the prior-year quarter.

Civil: Sales increased decreased 36% year over year to $129.8 million. The segment reported a gross profit of $3.1 million compared with $10.8 million in the prior-year quarter.

Financial Update

Primoris had cash and cash equivalents of $148.5 million at the end of the first quarter compared with $135.8 million as of 2016 end. The company generated cash flow from operations of $49.1 million in the reported quarter compared with cash usage of $35.6 million recorded in the year-ago quarter.

Long-term debt, excluding the current portion, was $195.2 million as of Mar 31, 2017 compared with $203.4 million as of Dec 31, 2016.

On May 5, the board of directors declared 5.5 cents per share dividend to stockholders of record on Jun 30, payable on or about Jul 15.

Share price Performance

Year to date, Primoris outperformed the Zacks categorized Building Products and Heavy Construction sub industry. The company’s shares gained around 4.6% during this period compared with roughly 3.4% growth recorded by the industry.



Primoris currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the construction sector include MasTec, Inc. (MTZ - Free Report) , Boise Cascade Company (BCC - Free Report) and TopBuild Corp. (BLD - Free Report) . All of the three stocks boast a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

MasTec has an average positive earnings surprise of 34.14% in the trailing four quarters. Boise Cascade generated an average earnings surprise of 114.74% over the last four quarters, while TopBuild has an average earnings surprise of 27.38% in the same time frame.

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